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CEO Personality and Firm Policies

Author

Listed:
  • Gow, Ian D.

    (Harvard University)

  • Kaplan, Steven N.

    (University of Chicago)

  • Larcker, David F.

    (Stanford University)

  • Zakolyukina, Anastasia A.

    (University of Chicago)

Abstract

Based on two samples of high quality personality data for chief executive officers (CEOs), we use linguistic features extracted from conferences calls and statistical learning techniques to develop a measure of CEO personality in terms of the Big Five traits: agreeableness, conscientiousness, extraversion, neuroticism, and openness to experience. These personality measures have strong out-of-sample predictive performance and are stable over time. Our measures of the Big Five personality traits are associated with financing choices, investment choices and firm operating performance.

Suggested Citation

  • Gow, Ian D. & Kaplan, Steven N. & Larcker, David F. & Zakolyukina, Anastasia A., 2016. "CEO Personality and Firm Policies," Research Papers 3444, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3444
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    Cited by:

    1. Keloharju, Matti & Knüpfer, Samuli & Tåg, Joacim, 2020. "CEO Health," Working Paper Series 1326, Research Institute of Industrial Economics, revised 30 May 2022.
    2. Licht, Amir N. & Adams, Renee B., 2020. "Shareholders and Stakeholders around the World: The Role of Values, Culture, and Law in Directors' Decisions," LawFin Working Paper Series 13, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    3. Gianpaolo Parise & Kim Peijnenburg, 2017. "Understanding the determinants of financial outcomes and choices: the role of noncognitive abilities," BIS Working Papers 640, Bank for International Settlements.
    4. Hoang, Daniel & Wiegratz, Kevin, 2022. "Machine learning methods in finance: Recent applications and prospects," Working Paper Series in Economics 158, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    5. Ron Tidhar & Kathleen M. Eisenhardt, 2020. "Get rich or die trying… finding revenue model fit using machine learning and multiple cases," Strategic Management Journal, Wiley Blackwell, vol. 41(7), pages 1245-1273, July.
    6. Evangelos Mourelatos & Nicholas Giannakopoulos & Manolis Tzagarakis, 2022. "Personality traits and performance in online labour markets," Behaviour and Information Technology, Taylor & Francis Journals, vol. 41(3), pages 468-484, February.
    7. Michał Dzieliński & Alexander F. Wagner & Richard J. Zeckhauser, 2017. "Straight Talkers and Vague Talkers: The Effects of Managerial Style in Earnings Conference Calls," NBER Working Papers 23425, National Bureau of Economic Research, Inc.
    8. Kieschnick, Robert & Moussawi, Rabih, 2018. "Firm age, corporate governance, and capital structure choices," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 597-614.
    9. Bradley E. Hendricks & Mark Lang & Kenneth Merkley, 2022. "Through the eyes of the founder: CEO characteristics and firms’ regulatory filings," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(3-4), pages 383-422, March.
    10. Karel Hrazdil & Jiri Novak & Rafael Rogo & Christine Wiedman & Ray Zhang, 2020. "Measuring executive personality using machine‐learning algorithms: A new approach and audit fee‐based validation tests," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(3-4), pages 519-544, March.
    11. Jun Xie & Wataru Nozawa & Shunsuke Managi, 2023. "The nexus of top executives’ attributes, firm strategies, and outcomes: Large firms versus SMEs," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-15, December.
    12. Bennouri, Moez & Chtioui, Tawhid & Nagati, Haithem & Nekhili, Mehdi, 2018. "Female board directorship and firm performance: What really matters?," Journal of Banking & Finance, Elsevier, vol. 88(C), pages 267-291.
    13. Bäumer, Marcus, 2020. "What matters to investment professionals in decision making? The role of soft factors in stock selection," EIKV-Schriftenreihe zum Wissens- und Wertemanagement, European Institute for Knowledge & Value Management (EIKV), Luxembourg, volume 44, number 44, September.
    14. Theophilus Lartey & Kwabena Kesse & Albert Danso, 2020. "Ceo Extraversion And Capital Structure Decisions: The Role Of Firm Dynamics, Product Market Competition, And Financial Crisis," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 43(4), pages 847-893, December.
    15. Vijay S. Sampath & Arthur J. O’Connor & Calvester Legister, 2022. "Moral leadership and investor attention: An empirical assessment of the potus’s tweets on firms’ market returns," Review of Quantitative Finance and Accounting, Springer, vol. 58(3), pages 881-910, April.
    16. Jochen Becker & Josip Medjedovic & Christoph Merkle, 2019. "The Effect of CEO Extraversion on Analyst Forecasts: Stereotypes and Similarity Bias," The Financial Review, Eastern Finance Association, vol. 54(1), pages 133-164, February.
    17. OKUBO Toshihiro & Alexander F. WAGNER & YAMADA Kazuo, 2017. "Does Foreign Ownership Explain Company Export and Innovation Decisions? Evidence from Japan," Discussion papers 17099, Research Institute of Economy, Trade and Industry (RIETI).
    18. Aabo, Tom & Hansen, Malene & Krog, Sara Husted & Kynde, Katrine, 2024. "Explaining differences in CEO gender diversity across industries: Do personality traits matter?," Global Finance Journal, Elsevier, vol. 61(C).
    19. Steven N. Kaplan & Morten Sorensen, 2017. "Are CEOs Different? Characteristics of Top Managers," NBER Working Papers 23832, National Bureau of Economic Research, Inc.
    20. Du, Yao & Chan, Chia-Ying & Lin, Chih-Yung & Lu, Chien-Lin, 2023. "Charitable CEOs and employee protection," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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